The bulls followed up on Wednesday’s rally with a gap up on Thursday. However, the rest of the day was indecisive. Still, the SPY (+0.66%), DIA (+0.75%), and QQQ (+0.85%) each closed at a new all-time high close. Among the drivers of the move was more relief from de-escalation of the US-Iran conflict and big moves by tech heavyweights AAPL (+2.1%) and AMD (+2.4%). The VXX fell again to 14.19 and market breadth remains in the mid-range with the T2122 sitting at 66.67.
An important, under-reported story Wed. was significant changes the Trump Administration unveiled to the Environmental Protection Act. If enacted, these may have significant economic (and/or other) impact. The first change is that there would no longer be any Federal review of construction projects that do not involve substantial federal funding. Second, it would be much easier for all Federal agencies to approve infrastructure projects without studying or considering environmental or wildlife (endangered species) impacts. While this technically covers a wide range of construction, the most impacted types would be road, bridge, tunnel, pipelines and telecom construction (including cell tower and 5G build-out). There will be a 60-day comment period on the new policy proposals before they are made law by the administration. So, expect a political fight on this one.
Economic data continues to be strong as Weekly Jobless Claims again came in under expectation yesterday. (214,000 versus 220,000 expected.) However, the big news story of the day was not economic, but instead the crash (shootdown?) of the Ukrainian 737 in Tehran.
Overnight, Asian markets were in all the green. We also see green across the board in European markets so far. As of 7:45 am, U.S. futures are pointing to a quarter to half a percent gap up again at this point.
Friday’s major economic news includes Dec. Average Hourly Earnings, Dec. Non-farm Payrolls, and Dec. Unemployment Rate (all at 8:30 am). There are no earnings reports on the day.
Once again, it appears the only thing the bulls fear is over-extension. They've only wanted to hear good news for a long time now. However, while very bullish "in the now," this is also a risk factor, because it’s the unexpected shock that really moves markets dramatically. So, all we can do is continue to be cautious, use hedges and follow the trend. As always, you know my mantra, keep planning your trades, and trading your plans. Taking profits along the way, move your stops to protect yourself, and wait for the trade to come to you.
Sorry, but no Swing Trade Ideas for your consideration and watchlist on Friday (Pay Day). Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about are not recommendations to buy or sell.
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